Senior officials of the former Sakura Bank collected donations from firms the bank was lending to for Junichiro Koizumi before he became prime minister, informed sources said Friday.

The officials of the major Tokyo-based bank, now part of Sumitomo Mitsui Banking Corp., solicited the donations during the 4 1/2 years from small and midsize firms until just before Koizumi took office in April 2001, they said.

The donations raise questions because they were apparently collected from among firms that were borrowing from Sakura Bank. The Political Funds Control Law prohibits collecting donations by inappropriately using the influence of organizations or business relationships.

Koizumi, however, has flatly denied that the donations were questionable.

"The (initial media) report (on the matter) was a malicious one," Koizumi told reporters. "It was absolutely no problem. Who could offer political donations in a cleaner way?"

Several senior officials at Sakura Bank established a support group for Koizumi in fall 1996. The organizers were graduates of Koizumi's alma mater, Keio University, the sources said.

The group asked retired Sakura Bank officials who were also Keio graduates, their friends and managers at the bank who dealt with loan customers to join the organization, the sources said.

The group counted 30 to 40 members at its peak and annual membership fees were 48,000 yen, with corporate members paying several fees, they said. The collected fees were then given to Koizumi as political donations.

Members paid their fees into an account at Sakura Bank's branch near the main campus of Keio University in Tokyo's Minato Ward. The group disbanded in the beginning of 2001, and the account was also closed, according to the sources. Sakura Bank merged with Sumitomo Bank in April 2001 to create Sumitomo Mitsui Banking.

Koizumi's office said it was a private group to promote personal exchanges, noting donations from the group were handled appropriately in accordance with the Political Funds Control Law.

Sumitomo Mitsui Banking denied any involvement, but said it cannot confirm the details of the group because it was established based on individual relations.

Chief Cabinet Secretary Yasuo Fukuda said at a news conference the government will question one of Koizumi's secretaries about the donations.

"We cannot comment without a thorough investigation on the details of the case," Fukuda said. "We do not believe Koizumi himself was involved in the matter and we will question his secretary who was in charge of political funds."